FinTech experts share their expectations ahead of the Indian Union Budget 2024

By Puja Sharma

A significant amount of anticipation is surrounding the Indian FinTech budget in 2024 as industry leaders await the Union Budget 2024-25. A key anticipation is the fortification of the regulatory framework for the FinTech industry in India.

The unveiled draft framework aimed at regulating FinTech activities stands as a testament to the acknowledgement of the escalating influence of FinTech companies. Upon finalization, this framework promises to guide and nurture responsible growth and innovation within the Indian FinTech sector, contributing significantly to financial inclusion and broader economic advancement—a focal point we anticipate the budget to address.

Dilip Modi, Founder of Spice Money said, “As we approach the upcoming Union Budget, it is imperative to recognize the pivotal role played by transformative innovations and developments in the FinTech industry. The technological strides in this sector redefine our domestic financial landscape and harbour the potential to reshape the global perception of Indian FinTech.”

Financial inclusion is another critical aspect likely to be addressed in the budget. The announcement of the streamlined credit platform underscores the RBI’s commitment to facilitating easy access to credit for small businesses and individuals. This platform promises to simplify and expedite the lending process, rendering it more efficient for borrowers to secure essential financing. The ultimate success of these measures’ rests on their successful implementation and effectiveness—key considerations we anticipate the budget to underscore.

“Furthermore, the collaborative efforts with key stakeholders, including SIDBI, NABARD, and the agriculture ministry, are pivotal in propelling India’s digital commerce onto the international stage. We expect the budget to spotlight the growth potential of ONDC and eCommerce for emerging India. The Indian FinTech industry eagerly awaits the 2024 budget, aspiring for a comprehensive approach that acknowledges the vast potential of FinTech to drive inclusive economic growth, empower individuals with modern financial services, and contribute substantially to the nation’s overall development in the digital era.”

Neha Juneja, CEO of IndiaP2P.com, said, “Indian FinTech companies see great potential in expanding into rural and semi-urban consumers, seeking policies that enhance financial inclusion. While the budget is only a Vote on Account, and a detailed version would appear only after the formation of a new government, an essential desire is for the government to continue its support for digital infrastructure and technology adoption.  We expect to see more initiatives that spur the adoption and expansion of rural financial services and allow for new FinTech-led business models to operate.”

Additionally, the sector is optimistic about the potential simplification of regulatory frameworks.

Financial inclusion remains a focal point, with FinTech companies exploring innovative ways to reach underserved populations. Collaboration between FinTech firms and traditional financial institutions may also become more prevalent, creating hybrid models that combine the strengths of both sectors.

Regarding the outlook for FinTech in 2024, a significant trend is the evolution of business models that index towards early profits. Startups will likely continue facing difficulty in capital raises, prohibiting growth models that rely on high customer acquisition costs in the medium to long term. We may also see consolidation in various sub-sectors and more prominent startups, adding features that contribute to the bottom line.  Businesses will also evolve to incorporate the latest AI and blockchain technology developments.

Overall, the 2024 outlook for Indian FinTech is characterized by a dynamic landscape driven by technological advancements, regulatory reforms, and a commitment to financial inclusion. As the sector matures, it is poised to reshape India’s financial ecosystem. Balasubramanian, CEO of FSS Cash Tech shared his expectation of the budget regarding the Payment Infrastructure: “Given that this will be an interim Budget, I expect the Honorable Finance Minister Nirmala Sitharaman to showcase the government’s vision leading up to the upcoming Lok Sabha elections. This government has always focused on making India digitally progressive, which is one of the reasons why we have seen digital payments grow exponentially over the last few years.

“We’re now at a stage where customers expect digital payments to be fast, secure, and smooth. In this light, financial institutions and companies will have to use new-age technologies to meet customer expectations. Cloud technology will play a significant role here. RBI’s proposal to establish a cloud facility for the financial sector was a significant move in this direction. I hope the FM furthers this in the budget, and we would like to see dedicated policies on cloud technology for payment.”

With the recent milestone achievement by the Reserve Bank of India (RBI) of the digital rupee surpassing 1 million daily transactions (as of December 27, 2023), CBDC should be included as a part of financial inclusion in the budget this year. The government should also focus on expanding the reach of digital payments to the smaller cities and towns in India. What is now becoming the norm in urban India must be adopted nationwide to take Digital India to the next level.”